Exhibit 10(a)
ASSET PURCHASE AGREEMENT
By and Among
GUARDIAN INTERNATIONAL, INC.,
a Nevada corporation, as Buyer,
GATOR TELECOM, INC.
a Florida corporation, as Seller,
and
Xxx Xxxxxxxx and Xxxxx Xxxxxxxx,
Florida residents, in their
capacity as the sole Shareholders of Seller
March 9, 1998
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is effective as of
March 9, 1998 by and among Guardian International, Inc., a Nevada corporation
("BUYER"), Gator Telecom, Inc., a Florida corporation ("Seller"), and Xxx
Xxxxxxxx and Xxxxx Xxxxxxxx, Florida residents (collectively, "SHAREHOLDERS").
Buyer, Seller and Shareholders are sometimes referred to individually herein as
a "PARTY" and collectively herein as the "PARTIES."
Seller provides burglar alarm, fire alarm, closed circuit television
and electronic access and control and central station monitoring services to
residential and commercial customers. Buyer desires to purchase, and Seller
desires to sell, substantially all of the assets of the Seller on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
"ACCOUNTS RECEIVABLE" means all accounts receivable of Seller relating
to the Alarm Service Assets (as hereinafter defined), including, without
limitation, all trade, billed, unbilled, and miscellaneous accounts receivable,
evidencing or representing indebtedness or obligations due to the Seller
relating to the Alarm Service Assets, or rights to payment in existence for or
on account of goods or other properties sold, licensed or leased or for services
rendered by the Seller in the operation of the Alarm Service Assets, all sums of
money or other proceeds due thereon, all customer guarantees and security with
respect thereto, including, but not limited to, the right of stoppage in
transit, replevin and reclamation, together with all right, title and interest
of the Seller in and to all instruments, agreements and documents covering or
relating to any of the foregoing, and all rights, remedies and claims of the
Seller under, or in respect of, any of the foregoing.
"ALARM SERVICE ASSETS" means the assets, operations and activities of
the Seller as conducted on the date hereof, pursuant to which the Seller
provides Services (as hereinafter defined).
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"CLOSING" has the meaning set forth in Section 2.7 below.
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"CODE" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations promulgated thereunder.
"CONFIDENTIALITY AGREEMENT" means that certain Nondisclosure Agreement,
dated as of August 21, 1997, between Buyer and Seller.
"COVERED PERSON" means, collectively, Buyer, its affiliates, and their
respective accounting and legal representatives, as well as their respective
officers, directors, shareholders, employees and agents.
"CUSTOMER CONTRACT" means any contract, agreement, commitment or
arrangement between Seller and any of its customers with respect to the
provision of Services which is listed on the Customer Contract Schedule attached
hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations promulgated thereunder.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"INDEBTEDNESS" of any entity means all obligations of such entity which
in accordance with GAAP should be classified upon a balance sheet as liabilities
of such entity, and in any event, regardless of how classified in accordance
with GAAP, shall include, without limitation or duplication: (i) all obligations
of such entity for borrowed money or which has been incurred in connection with
the acquisition of property, assets or services, (ii) obligations secured by any
lien or other charge upon property or assets owned by such entity, even though
such entity has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
entity, whether or not the rights and remedies of the Seller, lender or lessor
under such agreement in the event of default are limited to repossession or sale
of the property, and (iv) capitalized rentals under any capitalized lease (as
defined under GAAP).
"INTELLECTUAL PROPERTY" means all (i) patents, patent applications,
patent disclosures, and improvements thereto, (ii) trademarks, service marks,
trade dress, logos, trade names, and corporate names and registrations and
applications for registration therefor, (iii) copyrights and registrations and
applications for registration thereof, (iv) mask works and registrations and
applications for registration thereof, (v) web sites, computer software, data
and documentation including, without limitation, ownership or rights to use,
source code and object code, (vi) trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
research and development information, software products in development,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial (excluding employee benefit plans), marketing,
and business data, pricing and cost information,
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business and marketing plans, and customer and supplier lists and information),
and (vii) copies and tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" or any variant thereof, means the actual knowledge of a
person, together with whatever knowledge a reasonable person under similar
circumstances would have had after reasonable investigation and inquiry.
References herein to Seller's Knowledge, or any variant thereof, shall include
any Knowledge of the Shareholders. In the case of a statutory interpretation, a
Party shall not be deemed to having knowingly violated such statute if the act
or omission ultimately determined to have been in violation of such statute did
not, at the time taken or omitted, violate any outstanding judicial or
administrative order, ruling or regulation with respect to such statute.
"LIABILITY" means any liability (whether known or unknown, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes (as hereinafter defined).
"LOSS" means any damage (including, but not limited to, consequential
damages and punitive damages) obligation, payment, cost, expense, injury,
judgment, penalty, fine, interest, or other loss (including, but not limited to,
the cost and expense of defending or prosecuting any and all charges, claims,
complaints, actions, demands, assessments, litigation, proceedings, hearings,
investigations, notices, judgments, orders, decrees and settlements relating
thereto, expenses of preparation and investigation thereof and attorneys',
experts', consultants' and accountants' fees in connection therewith).
"MATERIAL ADVERSE CHANGE" means any change, event or occurrence which
has, or could reasonably be expected to have, a material adverse effect upon the
assets, business, operations, financial condition or prospects of the Seller or
the Alarm Service Assets.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
the Seller consistent with past custom and practice of the Seller (including
with respect to quantity and frequency).
"PASS THROUGH CHARGES" shall mean direct connect phone line expense;
cellular phone back-up service expense; direct inward dial telephone line
expense; third party municipal monitoring expense; back-up radio expense,
commissions to municipalities; and any other charges that are not of a regular
and recurring nature.
"PERSON" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity.
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"QUALIFIED MRI" means (a) the total monthly recurring income ("MRI")
billed to the alarm system customers by Seller under written and fully executed
Customer Contracts for the provision of Services with original terms of not less
than one year containing annual renewal provisions calculated as of the Closing
Date, including Customer Contracts whose initial billing commences after the
Closing Date and that provide for not more than 12 months of monitoring at no
charge, that meet the following criteria: (i) as of the Closing Date, the
account does not have a receivable balance in excess of 90 days past due as of
the applicable Service Date for such account, and (ii) as of or prior to the
Closing Date, the account has not cancelled or provided notice of cancellation
(whether orally or in writing), and the Seller has no Knowledge that the account
will be cancelled prior, at, or subsequent to the Closing Date, LESS (b) all
Pass Through Charges associated with all Customer Contracts which meet the
criteria outlined in clauses (i) and (ii) above.
"SECURITY INTEREST" means any lien, claim, mortgage, pledge, security
interest, charge or other encumbrance of any nature.
"SERVICE DATE" means the first day of any calendar month in which
Services are provided.
"SERVICES" means burglar alarm services, fire alarm services, closed
circuit television and electronic access control services, all central station
monitoring services, maintenance services, leases, fire testing and all other
services provided to commercial, residential and other customers of the Seller.
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, communications, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transaction, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2 - THE TRANSACTION
2.1 ACQUIRED ASSETS. On and subject to the terms and
conditions of this Agreement at the Closing, Buyer shall purchase from Seller,
and Seller shall sell, transfer, convey and deliver to Buyer, free and clear of
all Security Interests, all of Seller's right, title and interest in and to all
of the Alarm Service Assets set forth on the ACQUIRED ASSETS SCHEDULE, together
with all of the other Alarm Service Assets other than the Excluded Assets (as
defined in
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Section 2.2). Except to the extent that they constitute Excluded Assets, the
Acquired Assets shall include, without limitation, all of Seller's right, title
and interest in the following assets:
(a) prepaid costs and prepaid expenses listed on the ACQUIRED
ASSETS SCHEDULE attached hereto;
(b) raw materials and supplies, manufactured and purchased
parts (including without limitation motion, smoke and heat detectors and alarm
control panels and wiring, whether or not held on Seller's premises, its
customers' premises or elsewhere), work- in-process, finished goods, spare parts
and other items of inventory including, without limitation, the inventory listed
on the ACQUIRED ASSETS SCHEDULE attached hereto (the "Inventory");
(c) machinery, equipment, furniture and other tangible
personal property including, without limitation, that listed on the ACQUIRED
ASSETS SCHEDULE, attached hereto;
(d) Intellectual Property, any goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto (including,
without limitation, any and all other proprietary software developed by or for
Seller for use in connection with the Alarm Service Assets) to the extent
permitted the licenses and sublicenses granted and obtained by Seller with
respect to the Intellectual Property, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions; the name "Gator Telecom, Inc." and all other trade
names, trade dress, and logos as more fully described on the INTELLECTUAL
PROPERTY SCHEDULE attached hereto.
(e) Customer Contracts;
(f) rights under agreements, contracts, purchase orders,
commitments, contractual rights and other similar arrangements that are set
forth on the ASSUMED CONTRACTS SCHEDULE attached hereto (the "ASSUMED
CONTRACTS");
(g) all claims, refunds, rights of recovery, rights of set off
and rights of recoupment of any kind arising out of the Alarm Service Assets
from and after the Closing Date;
(h) all franchises, approvals, permits, licenses, orders,
registrations, certifi xxxxx, variances and similar rights obtained from
governments and governmental agencies to the extent transferable to Buyer
relating to the Alarm Service Assets;
(i) rights to the following telephone numbers for Hillsborough
County, Florida: line 1 - (813) 874-7474; line 0 - (000) 000-0000; line 3 -
(000) 000-0000; line 0 - (000) 000-0000; line 0 - (000) 000-0000; fax - (813)
000-0000; toll free - (000) 000-0000, and any other telephone number(s) used in
the operation of the Alarm Service Assets; and rights to receive mail and other
communications addressed to Seller regarding the Alarm Service Assets
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(including mail and communications from customers, suppliers, distributors,
agents and others and payments regarding the Alarm Service Assets);
(j) books, records, ledgers, files, documents, correspondence,
lists, drawings, specifications, advertising and promotional materials, studies,
reports and other printed or written materials regarding the Alarm Service
Assets; and
(k) all Accounts Receivable.
2.2 EXCLUDED ASSETS. Notwithstanding the foregoing, the
Acquired Assets shall not include the following assets of Seller (collectively,
the "EXCLUDED ASSETS"):
(a) those assets set forth on the EXCLUDED ASSETS SCHEDULE
attached hereto;
(b) all rights to receive mail and other communications
addressed to Seller relating to any of the Excluded Assets or the Excluded
Liabilities, or any matter other than the Alarm Service Assets;
(c) all contracts and agreements other than Customer Contracts
and Assumed Contracts;
(d) cash and cash equivalents as of March 6, 1998;
(e) prepaid costs and prepaid expenses not listed on the
Acquired Assets Schedule;
(f) Seller's and Shareholders' interest in this Agreement and
any proceeds to be paid to the Seller pursuant to the transactions contemplated
by this Agreement;
(g) all claims for refunds, rights of recovery, rights of
setoff and rights of recoupment, except to the extent they relate directly to
the Acquired Assets of the Assumed Liabilities (as hereinafter defined); and
(h) any loans made by Seller to its employees or the
Shareholders, whether or not reflected on the books and records of the Seller.
2.3 ASSUMED LIABILITIES. On and subject to the terms and
conditions of this Agreement, Buyer shall assume, solely and exclusively, the
obligations and liabilities of Seller (including obligations and liabilities
arising in connection with warranties extended by Seller in the Normal Course of
Business in connection with the installation of alarm systems and maintenance of
alarm systems) with respect to the Assumed Contracts and Customer Contracts
(excluding liabilities arising by reason of any breach or alleged breach by
Seller under any
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Assumed Contract or Customer Contract on any Basis prior to the Closing Date
(regardless of when any such liability is asserted)) (collectively, the "ASSUMED
LIABILITIES").
2.4 EXCLUDED LIABILITIES. Notwithstanding anything to the
contrary contained in this Agreement, Buyer shall not assume nor be liable for
any Liability of Seller, the Alarm Service Assets or the Shareholders other than
the Assumed Liabilities (collectively, the "EXCLUDED LIABILITIES") and, without
limiting the generality of the foregoing, each of the following liabilities or
obligations shall be Excluded Liabilities for purposes of this Agreement:
(a) all of Seller's and Shareholders' liabilities and
obligations in connection with the transactions contemplated by this Agreement;
(b) all of Seller's and Shareholders' liabilities and
obligations for expenses, Taxes or fees incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement or the
consummation (or preparation for the consummation) of the transactions
contemplated hereby (including, without limitation, all attorneys' and
accountants' fees and brokerage fees);
(c) all of Seller's and Shareholders' liabilities and
obligations with respect to any income Taxes or with respect to any other Taxes
for any period;
(d) all of Seller's and Shareholders' liabilities and
obligations (i) arising by reason of any violation or alleged violation of any
federal, state, local or foreign statute, law, rule or regulation or any
requirement of any governmental authority, or (ii) arising by reason of any
breach or alleged breach by Seller of any agreement, contract, lease, license,
commitment, instrument, judgment, order or decree (regardless of when any such
liability or obligation is asserted and regardless of whether any such liability
arises under any Assumed Contract or Customer Contract);
(e) all liabilities and obligations under any Assumed
Contracts and Customer Contracts for product or service liability occurrences
with respect to products manufactured or services rendered on or prior to the
Closing Date;
(f) all of Seller's liabilities and obligations, if any, which
Buyer may become liable for as a result of or in connection with the failure by
Buyer or Seller to comply with any bulk sales or transfer laws;
(g) all of Seller's liabilities and obligations relating to
legal actions and proceedings arising out of or in connection with Seller's
conduct of its business (including its operation of the Alarm Service Assets),
any other conduct of Seller and any conduct of Seller's officers, directors,
shareholders, employees, consultants, agents or advisors as of or prior to the
Closing Date, whether or not disclosed on the Schedules hereto;
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(h) all of Seller's liabilities and obligations under any Plan
(as defined in Section 3.1(1)) including, without limitation, severance and
stay-thru bonus arrangements, or for workers' compensation claims, health care
claims or similar claims;
(i) all other liabilities and obligations of Seller not
expressly assumed by Buyer under Section 2.3 (including liabilities and
obligations arising out of transactions entered into at or prior to the Closing,
action and inaction at or prior to the Closing and any state of facts existing
at or prior to the Closing, regardless of when asserted).
Seller hereby acknowledges that it is retaining the Excluded Liabilities and
Seller shall have the sole responsibility to pay, discharge and perform all
liabilities and obligations relating to the Excluded Liabilities promptly when
due. For purposes of this Section 2.4, references to the Seller shall be deemed
to include the Shareholders as well.
2.5 PURCHASE PRICE; ALLOCATION SCHEDULE.
(a) The aggregate purchase price (the "PURCHASE PRICE") for
the Acquired Assets is $1,700,000 and the other covenants, agreements and
conditions contained herein, payable to Seller as follows: $1,400,000 in
immediately available funds at Closing and 94,937 shares (the "Escrow Shares")
of Class A Common Stock of Buyer, par value $.001 per share (the "Common
Stock"), to be held in escrow pursuant to an Escrow Agreement in the form of
EXHIBIT A-6 until the first anniversary of the Closing Date subject to the terms
of Section 2.6.
(b) For all purposes (including, without limitation,
financial, accounting and Tax purposes), the Parties agree to allocate the
Purchase Price (including the Assumed Liabilities) among the Acquired Assets
identified on the PRICE ALLOCATION SCHEDULE in accordance with the PRICE
ALLOCATION SCHEDULE. Buyer and Seller shall each promptly file Form 8594,
prepared in accordance with this Section 2.5(d), with its federal income Tax
Return for its tax period including the Closing Date. The Parties shall work
together to agree upon the PRICE ALLOCATION SCHEDULE prior to the Closing and
Seller and the Shareholders shall not unreasonably withhold their consent to any
PRICE ALLOCATION SCHEDULE proposed by Buyer. All allocations made pursuant to
this Section 2.5(d) shall be binding upon the Parties and upon each of their
successors and assigns, and the Parties shall report the transaction herein in
accordance with such allocations.
2.6 GUARANTEE.
(a) The Escrow Shares shall be paid to Seller no later than 30
days after the first anniversary of the Closing Date (the "ANNIVERSARY DATE"),
subject to the following adjustments:
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(i) If the Anniversary MRI (as defined in
Section 2.6(c) below) is greater than the
Closing MRI, Buyer shall pay the full number
of Escrow Shares to Seller.
(ii) If the Anniversary MRI is less than the
Closing MRI and the difference of the
Closing MRI less Anniversary MRI is greater
than $7,700, no Escrow Shares shall be
payable to Seller.
(iii) If the difference between the Closing MRI
and the Anniversary MRI is greater than $0
but less than $7,700, the difference shall
be subtracted from $7,700, the resulting
value shall be divided by $7,700 and the
quotient shall be multiplied by the number
of Escrow Shares, the product of which shall
be the number of Escrow Shares to be
retained by Buyer (the "Retained Shares").
Buyer shall pay to Seller the number of
Escrow Shares equal to the difference
between the Escrow Shares and the Retained
Shares.
(b) REDUCTION IN ESCROW SHARES. In all cases, the number of
Escrow Shares due Seller under this Section shall be reduced by the amount of
all fines and other sums due to Seller's customers (collectively, "Fines") that
are paid by Buyer with respect to Seller's operation of the business on or
before the Closing Date. The number of Escrow Shares to be retained by Buyer
pursuant to this subsection shall be determined by dividing the Fines by the
average closing price for the Common Stock for the five trading days prior to
the date on which Buyer pays such Fines.
(c) ANNIVERSARY MRI. Anniversary MRI shall include all
Qualified MRI from Customer Contracts in force prior to and as of the Closing
Date and all Qualified MRI from Customer Contracts created during the 12 months
after the Closing Date from Seller's customers or referrals or from Seller's
employees who become Buyer's employees or representatives. Anniversary MRI shall
not include MRI acquired via acquisitions or Qualified MRI for which the
associated system installation revenue is less than the direct equipment and
labor costs of the system installation unless costs exceed revenue as a result
of sales promotions conducted by Buyer.
(d) VOLUME RESTRICTION ON SALE OF ESCROW SHARES. For the eight
calendar quarters following the Anniversary Date, neither Seller nor any
Permitted Transferee (as defined below) of Seller shall sell more than 11,867
shares (the "Volume Cap") of the Escrow Shares in any single calendar quarter.
In the event Transfers (as defined below) in any calendar quarter exceed the
Volume Cap, such Transfers shall be null and void and Buyer shall not record
such Transfer on its books or treat any purported Transferee (as defined below)
of such Escrow Shares as the owner of such Escrow Shares for any purpose. The
restrictions set forth in this subsection shall not restrict any Transfer of
Escrow Shares by a Seller or a Shareholder pursuant to applicable laws of
descent and distribution or among his Family Group (as defined below).
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(e) TRANSFER RESTRICTIONS ON ESCROW SHARES. The Seller shall
not transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily) any interest in the
Escrow Shares to a third party ("Transfer"), except in compliance with this
subsection and any other restrictions on Transfer contained in this Agreement.
(i) FIRST OFFER RIGHT OF BUYER. At least 15 days
prior to effecting any sale (a "Private
Sale") of the Escrow Shares other than to
the public pursuant to an offering
registered under the Securities Act of 1933,
as amended (the "Securities Act"), or to the
public through a broker, dealer or market
maker pursuant to the provisions of Rule 144
promulgated under the Securities Act of any
Escrow Shares to a third party, the Seller
(the "Transferring Shareholder") shall
deliver a written notice (an "Offer Notice")
to the President of Buyer who shall forward
it to an independent committee established
by the Board of Directors of Buyer (a
"Committee"). The Offer Notice shall
disclose in reasonable detail the proposed
number of Escrow Shares to be transferred,
the proposed terms and conditions of the
Transfer and the identity of the prospective
transferee(s) (if known). Buyer may, by
recommendation of the Committee, elect to
purchase all, but not less than all, of the
number of Escrow Shares specified in the
Offer Notice at the price and on the terms
specified therein by delivering written
notice of such election to the Transferring
Shareholder as soon as practicable but in
any event within 15 days after the delivery
of the Offer Notice (the "Election Period").
(ii) TRANSFERS TO THIRD PARTIES. If Buyer has not
elected to purchase all of such Escrow
Shares being offered in the Offer Notice,
the Transferring Shareholder may, within 90
days after the expiration of the Election
Period, Transfer all such Escrow Shares to
one or more third parties at a price not
less than 100% of the price offered to Buyer
and on other terms no more favorable to the
transferee(s) thereof than offered to Buyer
in the Offer Notice. Any Escrow Shares not
transferred within such 90-day period shall
be re- offered to Buyer under this
subsection prior to any subsequent Transfer.
(iii) PURCHASE PRICE. The purchase price specified
in any Offer Notice shall be payable solely
in cash at the closing of the transaction
or, if provided in the Offer Notice, in
installments over time.
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(iv) PERMITTED TRANSFERS. The restrictions set
forth in this subsection shall not apply
with respect to any Transfer of Escrow
Shares by the Seller to the Shareholders or
by the Shareholders pursuant to applicable
laws of descent and distribution or among
the Shareholders' Family Group ("Permitted
Transferees"). For purposes of this
Agreement, "Family Group" means an
individual's spouse and descendants (whether
natural or adopted) and spouses of
descendants and any trust, family limited
partnership or similar entity solely for the
benefit of the individual and/or the
individual's spouse and/or descendants
and/or spouses of their descendants.
(f) RESTRICTIVE LEGEND. Each certificate evidencing the Escrow
Shares and each certificate issued in exchange for or upon the Transfer of any
such securities (a "Certificate" or "Certificates") shall be stamped or
otherwise imprinted with a legend in substantially the following form (the
"Restrictive Legend"):
Some or all of the securities represented by this
certificate may be subject to transfer restrictions
and/or certain other restrictions and obligations set
forth in an Asset Purchase Agreement effective as of
March 9, 1998 by and among the issuer of such
securities (the "Company"), Gator Telecom, Inc., and
the shareholders of Gator Telecom, Inc. (the "Asset
Purchase Agreement"). A copy of the Asset Purchase
Agreement shall be furnished without charge by the
Company to the holder hereof upon written request to
the Company at its principal executive office.
Buyer shall imprint the Restrictive Legend on Certificates outstanding as of the
Closing Date, in addition to imprinting on such Certificates a legend stating
that the Escrow Shares evidenced by such Certificate are not registered under
the Securities Act (the "Securities Law Legend").
(g) REMOVAL OF SECURITIES LAW LEGEND. In connection with the
Transfer of any Escrow Shares (other than a Transfer in a public offering
registered under the Securities Act), a Transferring Shareholder shall deliver
(a) written notice to Buyer describing in reasonable detail the Transfer or
proposed Transfer (the "Notice of Transfer") and (b) an opinion (the "Opinion")
of counsel, which (to Buyer's reasonable satisfaction) is knowledgeable in
securities laws matters, to the effect that such Transfer of Escrow Shares may
be effected without registration of such Escrow Shares under the Securities Act.
Upon delivery of the Notice of Transfer and the Opinion to Buyer by a
Transferring Shareholder, Buyer shall instruct its transfer agent to remove the
Securities Law Legend from the Certificate(s) evidencing such Escrow Shares.
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(h) REMOVAL OF RESTRICTIVE LEGEND. Removal of the Restrictive
Legend shall be governed in accordance with the terms of this Agreement.
(i) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Escrow Shares in violation of any provision of this
Agreement shall be void, and Buyer shall not record such Transfer on its books
or treat any purported Transferee of such Escrow Shares as the owner of such
Escrow Shares for any purpose.
2.7 CLOSING OF TRANSACTIONS
(a) CLOSING. Subject to the conditions set forth in this
Agreement, the closing of the transactions contemplated by this Agreement (the
"CLOSING") will take place at the offices of Steel Xxxxxx & Xxxxx LLP, 1900
Xxxxxxxx Point West, 000 Xxxxx Xxxxxxx Xxxxx, Xxxx Xxxx Xxxxx, Xxxxxxx
commencing at 10:00 A.M. local time on March 9, 1998 (the "CLOSING DATE"), or
such other time and place as the Parties may agree. The Closing and the
transactions contemplated by this Agreement shall be effective as of the close
of business on the Closing Date.
(b) DELIVERIES AT CLOSING. Subject to the conditions set forth
in this Agreement, the Parties agree to consummate the following transactions at
the Closing:
(i) Seller shall deliver to Buyer (A) a warranty
xxxx of sale in the form of EXHIBIT A-1, (B)
an assumption and assignment agreement in
the form of EXHIBIT A-2, (C) UCC-3
termination statements terminating all
Security Interests existing on the Acquired
Assets; (D) a lease (the "Lease") in the
form of EXHIBIT A-3 relating to Buyer's use,
after the Closing, of the facilities
occupied by the Alarm Service Assets,
together with any necessary consent or
estoppel letters from the lessor of the
facility (if applicable), which lease or
sublease shall be at a fair market rate as
established in consultation with a reputable
real estate brokerage firm; (E) an agreement
in the form of EXHIBIT A-4 relating to
Buyer's use after the Closing of certain
telephone lines of Seller used by the Alarm
Service Assets; (F) such other instruments
of sale, transfer, conveyance and assignment
as Buyer may reasonably request in form
satisfactory to Buyer and consistent with
the provisions of this Agreement; (G)
possession of the premises at which Seller
is located; (H) a Guaranty Agreement in the
form of EXHIBIT A-5; and (I) an Escrow
Agreement in the form of EXHIBIT A-6; and
(ii) Buyer shall deliver to Seller (A) an
assumption and assignment agreement in the
form attached hereto as EXHIBIT A-2, (B) the
Lease; (C) an Escrow Agreement in the form
of EXHIBIT A-6; (D)
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an Employment Agreement in the form of
EXHIBIT A-7; and (E) such other instruments
of assumption as Seller may reasonably
request in form satisfactory to Seller and
consistent with the provisions of this
Agreement.
14
(c) DELIVERIES AT ANNIVERSARY DATE CLOSING. Buyer shall
deliver to Seller certificates evidencing the Escrow Shares to be transferred,
if any, no later than 30 days after the Anniversary Date.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. As a material
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller (and when expressly set forth
hereafter, Shareholders) represents and warrants to Buyer that the statements
contained in this Section 3.1 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date.
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(i) Seller is a corporation duty organized,
validly existing, and in good standing under
the laws of the State of Florida. The Seller
has full corporate power end authority to
carry on its business and to own and use the
properties owned and used by the Seller in
the operation of the Alarm Service Assets.
(ii) The Seller is qualified to conduct business
and is in good standing under the laws of
each other jurisdiction wherein the nature
of its business or its ownership of property
requires it to be so qualified.
(iii) The Articles of Incorporation and Bylaws of
Seller, all of which have been previously
delivered to Buyer, reflect all amendments
currently in effect made thereto at any time
prior to the date of this Agreement and are
correct and complete.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full
corporate power and authority, and each Shareholder has full power and
authority, to execute and deliver this Agreement and the other agreements
contemplated hereby to which each is a party and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
board of directors and Shareholders of Seller have duly authorized the
execution, delivery, and performance of this Agreement and the other agreements,
contemplated hereby to which it is a party. This Agreement and the other
agreements contemplated hereby to which Seller or the Shareholders is a party
constitute the valid and legally binding obligations of Seller and the
Shareholders, enforceable against each of them in accordance with their
respective terms, except as enforceability may be limited by bankruptcy, similar
laws of debtor relief and general principles of equity.
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(c) NONCONTRAVENTION. Except as disclosed on the CONSENTS
SCHEDULE or GOVERNMENTAL CONSENT SCHEDULE attached hereto, neither the execution
and the delivery of this Agreement and the other agreements contemplated hereby,
nor the consummation of the transactions contemplated hereby or thereby will
violate, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any authorization, consent, approval,
execution or other action by or notice to any third party under, the Articles of
Incorporation and Bylaws of Seller, any contract (including without limitation,
any Customer Contract or Assumed Contract), lease, sublease, license,
sublicense, franchise, permit, indenture, agreement, instrument of Indebtedness,
Security Interest, or other arrangement by which Seller, the Alarm Service
Assets or the Shareholders is bound or affected or, any law, statute, rule,
regulation, order, judgment, decree, stipulation, injunction, charge or other
restriction, to which Seller, the Alarm Service Assets or the Shareholders is
subject.
(d) GOVERNMENTAL CONSENT. Except as set forth on the
GOVERNMENTAL CONSENT SCHEDULE attached hereto, neither Seller nor the
Shareholders is required to make any declaration to or registration or filing
with, or to obtain any permit, license, consent, accreditation, exemption,
approval or authorization from, any governmental or regulatory authority
(including, without limitation, the Federal Communications Commission or any
state telecommunications regulatory bodies) in connection with the execution,
delivery or performance of this Agreement or the other agreements contemplated
hereby, or the consummation of any of the transactions contemplated hereby or
thereby.
(e) FINANCIAL DATA. Attached hereto as EXHIBIT B are true and
correct copies of unaudited consolidated balance sheets and statements of
income, changes in shareholders' equity, and cash flows dated as of December 31,
1995, December 31, 1996 and December 31, 1997 (collectively the "FINANCIAL
STATEMENTS") for the Company. The Financial Statements have been prepared in
accordance with GAAP throughout the periods covered thereby, and fairly present
the financial condition and results of operations as of December 31, 1995,
December 31, 1996 and December 31, 1997 and for the periods covered thereby.
(f) RECENT EVENTS. Since September 30, 1997, the Alarm Service
Assets have not experienced any Material Adverse Change.
(g) TITLE AND CONDITION OF PROPERTIES.
(i) TITLE TO PERSONAL PROPERTY ASSETS. The
Seller owns good and marketable title, free
and clear of all Security Interests and
other restrictions, to all of the Acquired
Assets.
(ii) CONDITION AND SUFFICIENCY OF ASSETS. All of
the Acquired Assets are in good condition
and repair, except for ordinary wear and
tear not caused by neglect and are useable
in the Ordinary Course of
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Business. The Acquired Assets include all
assets necessary to the conduct of the Alarm
Service Assets consistent with the past
custom and practices of Seller.
(h) INTELLECTUAL PROPERTY. Except as set forth on the
INTELLECTUAL PROPERTY SCHEDULE attached hereto:
(i) The Seller owns or has the right to use all
Intellectual Property necessary for the
operation of the Alarm Service Assets as
currently used by Seller. Each item of
Intellectual Property owned or used by
Seller with respect to the Alarm Service
Assets immediately prior to the Closing will
be owned and, to Seller's Knowledge, be
available for use by the Buyer on identical
terms and conditions immediately subsequent
to the Closing. Seller has taken all
necessary or desirable action to protect
each item of Intellectual Property that it
owns or uses in connection with the Alarm
Service Assets.
(ii) With respect to the Alarm Service Assets, to
the Seller's and Shareholders' Knowledge,
neither Seller nor the Shareholders has
interfered with, infringed upon,
misappropriated, or otherwise become engaged
in a controversy or dispute arising out of
any Intellectual Property rights of third
parties, and neither Seller, the
Shareholders nor any of the directors and
officers (and employees with responsibility
for Intellectual Property matters) of Seller
is aware of any charge, complaint, claim, or
notice alleging any such interference,
infringement, misappropriation, or
violation. To the Seller's and the
Shareholders' Knowledge, no third party has
interfered with, infringed upon,
misappropriated, or otherwise become engaged
in a controversy or dispute arising out of
any Intellectual Property rights of Seller
with respect to the Alarm Service Assets.
(i) CONTRACTS. The Seller has delivered or otherwise made
available to Buyer a correct and complete copy of each Customer Contract and
each Assumed Contract (including in each case all amendments thereto). With
respect to each Customer Contract and each Assumed Contract: (A) the contract is
legal, valid, binding, enforceable, and in full force and effect; (B) the
contract will, assuming that any required third party consent identified on the
CONTRACT CONSENT SCHEDULE with respect to such contract has been obtained,
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms immediately after the Closing; (C) the Seller is not
and no other party is in breach or default (including, without limitation, with
respect to any express or implied warranty), and no event has occurred which
with notice or lapse of time would constitute a breach or default or permit
termination,
17
modification, or acceleration, under the contract; (D) no party has repudiated
any provision of the contract; (E) the contract is in writing, has been fully
executed by all parties thereto, has been delivered to Buyer and has not been
modified of amended in any way other than through a written amendment signed by
all parties to such contract and delivered to Buyer, (F) in the case of Customer
Contracts, relates only to a security system for which installation has been
fully completed, billed and paid for prior to the Closing and (G) in the case of
Customer Contracts, is in substantially the form of the form customer contract
attached as EXHIBIT C hereto.
(j) LITIGATION. The LITIGATION SCHEDULE attached hereto sets
forth each instance in which Seller or the Shareholders (i) is subject to any
unsatisfied judgment, order, decree, stipulation, injunction, or charge that
relates in any way to the Seller or the Alarm Service Assets or (ii) is a party
or has been threatened to be made a Party to any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator, in each case which relates in any way to the Seller or
the Alarm Service Assets. None of the charges, complaints, actions, suits,
proceedings, hearings, and investigations set forth in the LITIGATION SCHEDULE
could result in a Material Adverse Change. Neither Seller, the Shareholders nor
the directors and officers (and employees with responsibility for litigation
matters) of Seller has Knowledge of any Basis on which any such charge,
complaint action, suit, proceeding, hearing, or investigation may be brought or
threatened which relates in any way to the Seller or the Alarm Service Assets.
(k) EMPLOYEES. The EMPLOYEE SCHEDULE attached hereto sets
forth the names, position and annual salaries (or hourly wage, as the case may
be) of each employee of Seller (the "EMPLOYEES"). To Seller's Knowledge, no
Employee or group of Employees has any plans to cease working for the Seller.
Seller is not a party to or bound by any employment agreement or understanding
or collective bargaining agreement relating to the Alarm Service Assets, and
Seller has not experienced any strikes, grievances, other collective bargaining
disputes or claims of unfair labor practices relating to Employees. There is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the Employees.
(l) EMPLOYEE BENEFITS. The EMPLOYEE BENEFITS SCHEDULE attached
hereto contains an accurate and complete list of all Plans (as defined below)
maintained or sponsored by Seller and made available to the Employees, including
all Plans contributed to, maintained or sponsored by each member of the
controlled group of companies, within the meaning of Sections 414(b), (c) and
(m) of the Code, of which Seller is a member. For purposes of this Agreement,
the term "PLANS" shall mean: (i) "employee benefit plans," as such term is
defined in Section 3(3) of ERISA, whether or not funded and whether or not
terminated and (ii) personnel policies, and fringe benefit plans, policies,
programs and arrangements, whether or not subject to ERISA, whether or not
funded, and whether or not terminated, including without limitation, stock
bonus, deferred compensation, pension, severance, bonus, vacation, travel,
incentive, and health, disability and welfare plans.
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(m) COMPLIANCE WITH LAWS: CERTAIN OPERATIONS.
(i) Except as disclosed in the LEGAL COMPLIANCE
SCHEDULE attached hereto, Seller and the
Shareholders are in compliance with and have
not violated any applicable statute law,
rule or regulation of any federal, state,
local or foreign government or agency
thereof which affects the Seller or the
Alarm Service Assets, and no notice, claim,
charge, complaint, action, suit proceeding,
investigation or hearing has been received
by Seller or the Shareholders or filed,
commenced or threatened in writing against
Seller or the Shareholders alleging any such
violation.
(ii) Except as disclosed in the LEGAL COMPLIANCE
SCHEDULE attached hereto, neither Seller nor
the Shareholders has been charged with, and
is not aware of any investigation with
respect to, any possible violation of any
Federal, state, local or foreign statute,
law, rule or regulation relating to the
Seller or the Alarm Service Assets, its
business practices, its employment practices
or the safety of working conditions in its
facilities, its Plans, or environmental
matters.
(iii) Except as set forth on the LEGAL COMPLIANCE
SCHEDULE attached hereto, with respect to
its operation of the Alarm Service Assets,
Seller is in compliance with all terms and
conditions of all required permits,
licenses, certificates, accreditations or
other authorizations of foreign, federal,
state and local government agencies required
for the legal conduct of the Seller or the
Alarm Service Assets, and is also in
compliance with all other limitations,
restrictions, conditions, standards,
prohibitions, requirements, obligations,
schedules and timetables contained in any
foreign, federal, state or local statute,
rule, law, or any regulation, code, plan,
order, decree or judgment, or any notice or
demand letter issued, entered, promulgated
or approved thereunder applicable to the
operation of the Alarm Service Assets.
(n) INVENTORIES. All of the Inventory consists only of items
of a quality and quantity usable or saleable by the Seller in the Ordinary
Course of Business at the amount reflected on the INVENTORY SCHEDULE attached
hereto.
(o) QUALIFIED MRI. The Qualified MRI for the residential and
commercial Customer Contracts is not less than $36,000.
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(p) ACQUIRED ASSETS. The book value (as calculated according
to GAAP) of the Acquired Assets listed in Section 2.1 is not less than $300,000.
(q) INSURANCE. The INSURANCE SCHEDULE attached hereto lists
and accurately describes each insurance policy maintained by Seller and the loss
history for all lines of insurance coverage maintained by the Seller with
respect to the Seller and the Alarm Service Assets. Complete and correct copies
of all such policies (or summary descriptions thereof) have been previously made
available to Buyer. All such insurance policies are in full force and effect,
and Seller is not in default with respect to its obligations under any of such
insurance policies.
(r) ILLEGAL OR IMPROPER PAYMENTS. Seller and its directors,
officers, employees, partners, Shareholders and agents, each have not:
(i) made any illegal political contributions
which relate in any way to the Alarm Service
Assets;
(ii) been involved in the disbursement or receipt
of corporate funds outside the normal
internal control systems of accountability
which relates in any way to the Alarm
Service Assets;
(iii) made or received payments, whether direct or
indirect, to or from foreign or domestic
governments, officials, employees or agents
which relate in any way to the Alarm Service
Assets for purposes other than the
satisfaction of lawful obligations, or been
involved in any transaction which relates in
any way to the Alarm Service Assets that has
or had as its intended effect the transfer
of funds or assets in the manner described;
or
(iv) been involved in the improper or inaccurate
recording of payments and receipts on the
accounting books of the applicable entity or
any other matters of a similar nature
involving disbursements of funds or assets
which relate in any way to the Alarm Service
Assets.
(s) AFFILIATE TRANSACTIONS. Except for the matters disclosed
on the AFFILIATE TRANSACTIONS SCHEDULE attached hereto (none of which will
survive the Closing without Buyer's express written consent), neither the
Shareholders, nor any of the directors, officers or other affiliates of Seller
is a party to any agreement, contract, commitment or transaction with Seller or
which pertains to the Alarm Service Assets or has any interest in any property
used in or pertaining to the Alarm Service Assets.
(t) PRODUCT WARRANTY. Each product or service sold, licensed
or delivered by Seller with respect to the Alarm Service Assets has been in
conformity with all applicable contractual commitments and all express and
implied warranties (including, without limitation,
20
any warranty of merchantability or fitness for a particular purpose), and Seller
does not have any Liability (and there is no Basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim or
demand against Seller giving rise to any Liability) for replacement or repair
thereof or other damages in connection therewith.
(u) ALARM SYSTEMS. To Seller's Knowledge, each of the alarm
systems installed or serviced by Seller pursuant to Customer Contracts, and all
alarm systems owned by Seller are in good working order and condition (except to
the extent not in such order and condition and not reported as such by the
subscriber to Seller and to the extent requiring services and repairs in the
Ordinary Course of Business), and have been installed and maintained in
accordance with good and workmanlike practices and with respect to those alarm
systems and panels where applicable, substantially in accordance with the
specifications or standards of the Insurance Services Offices, Underwriters
Laboratories, Factory Mutual Insurance Company and local authorities. No such
installation or maintenance has been performed in violation of any applicable
statute, law, code or regulation.
(v) BROKERS' FEES. Neither Seller nor the Shareholders have
any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which Buyer or any other Party could become liable or otherwise obligated.
(w) TAXES. All federal, state, local and foreign Tax Returns
and reports of the Seller applicable to the Alarm Service Assets required by law
to be filed have been duly filed, and all federal, state, local, foreign and any
other Taxes, assessments, fees and other governmental charges with respect to
the employees, properties, assets, income or franchises of the Seller shown on
such Tax Returns and reports to be due and payable have been paid or will be
paid by Seller prior to the Closing Date. Seller has received no written notice
of, nor do the Seller or the Shareholders have any knowledge of, any notice of
deficiency or assessment, or proposed deficiency or assessment, from any taxing
authority with respect to the Seller's business. There are no Tax audits pending
with respect to the Seller's business. There are no unpaid Taxes which are or
could become a lien on the Alarm Service Assets.
(x) RECEIVABLES. All Accounts Receivable are good and valid
receivables arising from the sale of goods and/or services in the Ordinary
Course of Business, and to Seller's Knowledge, such Accounts Receivable will be
collectible by Buyer within 90 days of the invoice date therefore for the full
amount thereof.
(y) DISCLOSURE. Neither this Section 3.1 nor any of the
information in the disclosure schedules attached hereto contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading. There is no material fact which has not been
disclosed to Buyer herein or in the disclosure schedules which would, or could
reasonably be anticipated to, result in a Material Adverse Change.
21
(z) ABSENCE OF UNDISCLOSED LIABILITIES. The Seller has no
Liabilities (whether known or unknown and whether absolute, accrued, contingent,
or otherwise) (and there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
against the Companies giving rise to any Liability) except for liabilities or
obligations incurred in the Ordinary Course of Business.
(aa) NO DISTRIBUTION. Seller is acquiring the Escrow Shares
for its own account with the present intention of holding such securities for
purposes of investment, and it has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws. Seller understands that the Escrow Shares are
"restricted securities" as defined in Rule 144 under the Securities Act, and
have not been registered pursuant to the provisions of the Securities Act, in as
much as the proposed purchase of the Escrow Shares is taking place in a
transaction not involving any public offering.
(bb) SOPHISTICATION. Seller is knowledgeable, experienced and
sophisticated in financial and business matters and is able to evaluate the
risks and benefits of the investment in the Escrow Shares.
(cc) ECONOMIC RISK. Seller is able to bear the economic risk
of its investment in the Escrow Shares for an indefinite period of time because
the Escrow Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available.
(dd) ACCESS TO INFORMATION. Seller has been furnished or
otherwise had full access to such other information concerning Buyer and its
subsidiaries as it has requested and that was necessary to enable the Seller to
evaluate the merits and risks of an investment in Buyer, and after a review of
this information, has had an opportunity to ask questions and receive answers
concerning the financial condition and business of Buyer and the terms and
conditions of the securities purchased hereunder, and has had access to and has
obtained such additional information concerning Buyer and the securities as the
Seller has deemed necessary.
(ee) ACCREDITED INVESTOR. Seller represents and warrants that
it is an "accredited investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. As a material
inducement to Seller and the Shareholders to execute this Agreement and
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller and the Shareholders that the statements contained in this
Section 3.2 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date.
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(a) ORGANIZATION. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada and
is qualified to conduct business and is in good standing under the laws of the
State of Florida.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by bankruptcy, similar laws of debtor
relief and general principles of equity.
(c) NONCONTRAVENTION. Assuming the accuracy of the
representations of Seller and the Shareholders in Section 3.1, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will, to Buyer's Knowledge, violate any
judgment, order, decree, injunction, or charge of any government, governmental
agency, or court to which Buyer is subject or any provision of the Certificate
of Incorporation or Bylaws of Buyer.
(d) GOVERNMENTAL CONSENT. Except for disclosures which may be
required under the federal securities laws, Buyer is not required to make any
declaration to or filing with, or to obtain any permit, license, consent,
accreditation, approval or authorization from, any governmental or regulatory
authority in connection with the execution, delivery or performance of this
Agreement or the consummation of any of the transactions contemplated hereby.
(e) BROKERS' FEES. Except for Buyer's obligations to Castle
Ventures, Inc., Buyer has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller or Shareholders could become
liable or obligated.
(f) DISCLOSURE. This Section 3.2 does not contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained herein, in light of the circumstances in which they were
made, not misleading. There is no material fact which has not been disclosed to
Seller or the Shareholders herein which materially and adversely affect, or
could reasonably be anticipated to, materially and adversely affect Buyer's
ability to perform its obligations under this Agreement.
ARTICLE 4 - CERTAIN COVENANTS OF BUYER AND SELLER
4.1 COOPERATION. Buyer and Seller each agree to reasonably
cooperate in order to effectuate a smooth transition. Seller shall reasonably
cooperate with Buyer in taking any steps reasonably requested by Buyer to
facilitate a smooth transition of the Alarm Service Assets to Buyer.
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4.2 FURTHER ASSURANCES. Each of the parties hereby covenants
and agrees, from time to time after the Closing, to execute and deliver such
other instruments and to take such other action (including obtaining any
required consents and approvals) as the other party may reasonably request in
order to more fully effectuate the transactions contemplated by this Agreement.
4.3 CONSENTS AND FRANCHISE APPROVALS. Seller and Buyer shall
exercise all commercially-reasonable efforts to obtain all consents and
approvals prior to Closing; provided, however, that Seller shall not, without
the prior written consent of Buyer (which shall not unreasonably be withheld),
agree to any modification of any Assumed Contract in connection with procuring
any consent or approval.
4.4 CONFIDENTIALITY.
(a) Buyer or Seller, as the case may be (the "Receiving
Party"), shall use any information, written or oral, furnished to it by or on
behalf of Seller or Buyer, as the case may be (the "Delivering Party"),
concerning the transactions contemplated by this Agreement ("Confidential
Information") solely in connection with the transactions contemplated by this
Agreement, and shall keep the Confidential Information confidential, except that
the Receiving Party may disclose the Confidential Information or portions
thereof to those directors, officers, affiliates and employees of the Receiving
Party and representatives of any advisors of Receiving Party or its affiliates
(the persons to whom such disclosure is permissible, collectively
"Representatives") who need to know such information for purposes of the
transactions contemplated by this Agreement. Before disclosing the Confidential
Information or any portion thereof to such Representatives, the Receiving Party
will inform them of the confidential nature of the Confidential Information and
obtain their agreement to be bound by the provisions of this Section 4.4 and not
to disclose the Confidential Information to any other person. In any event, the
Receiving Party shall be responsible for any breach of this Section 4.4
(pursuant to the indemnity provisions under Article 9) by any person or entity
to whom the Receiving Party or its Representatives shall have furnished
Confidential Information.
(b) If the Receiving Party or any of its Representatives
become legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) or shall be advised by
counsel to disclose any of the Confidential Information, the Receiving Party
shall provide the Delivering Party with prompt prior written notice of such
requirement or advice so that the Delivering Party may seek a protective order
or other appropriate remedy. If such protective order or other remedy is not
obtained or the Delivering Party does not seek a protective order or other
remedy, the Receiving Party agrees to furnish only that portion of the
Confidential Information which the Receiving Party is legally required to so
furnish and, at the request of the Delivering Party, to use reasonable efforts
to obtain assurance that confidential treatment will be accorded such
Confidential Information, it being understood that such reasonable efforts shall
be at the cost and expense of the Delivering Party.
24
(c) The term "Confidential Information" does not include any
information that (i) at the time of disclosure or thereafter is generally
available to the public (other than as a result of the disclosure directly or
indirectly by the Receiving Party or its Representatives), (ii) was or becomes
available to the Receiving Party or its Representatives from a source other than
the Delivering Party or its advisors, or any affiliates or representatives
thereof, provided that the Receiving Party or its Representatives have no
reasonable basis for concluding that such information was available in violation
of a confidentiality agreement with the Delivering Party.
(d) If this Agreement is terminated and the Delivering Party
so requests in writing, the Receiving Party will return to the Delivering Party
within 30 business days after such request all copies of written Confidential
Information in the Receiving Party's possession or in the possession of the
Receiving Party's Representatives and shall destroy any materials or notes the
Receiving Party or its Representatives may have prepared that incorporate any
Confidential Information.
(e) In the event of any breach or threatened breach of the
provisions of this Section 4.4, the parties acknowledge and agree that the
Delivering Party would suffer irreparable harm for which monetary damages would
be inadequate and, accordingly, the Delivering Party shall be entitled to
equitable relief, including in the form of injunctions and orders for specific
performance, in addition to all of the remedies available at law or in equity.
4.5 RISK OF LOSS.
(a) The risk of any loss or damage to the Acquired Assets
resulting from fire, theft or any other casualty (except reasonable wear and
tear) shall be borne by Seller at all times prior to Closing. If any such loss
or damage shall be sufficiently substantial so as to preclude and prevent
resumption of normal operations or the replacement or restoration of the lost or
damaged property within five days after the occurrence of the event resulting in
such loss or damage (a "Material Loss"), Seller shall immediately notify Buyer
in writing of its inability to resume normal operations or to replace or restore
such lost or damaged property. Buyer, at any time within ten days after receipt
of such notice, may elect by written notice to Seller to either (i) not waive
such defect and proceed toward consummation of the transactions in accordance
with terms of this Agreement, or (ii) terminate this Agreement.
(b) If Buyer elects to consummate the transactions
contemplated hereby notwithstanding a Material Loss and does so, or if there
occurs any loss or damage to the Acquired Assets that is not a Material Loss but
Seller cannot with reasonable diligence repair or replace the affected Acquired
Assets prior to Closing, there shall be no diminution of the Purchase Price on
account of such loss or damage, but all insurance proceeds payable as a result
of the occurrence of the event resulting in such loss or damage shall be
delivered by Seller to Buyer, or the rights thereto shall be assigned by Seller
to Buyer if not yet paid over to Seller, and at Closing Seller shall pay to
Buyer the amount of any difference between such proceeds and the
25
full replacement cost of the lost or damaged Acquired Assets (including, but not
limited to, any deductible associated with the insurance claim).
4.6 CONDUCT OF BUSINESS. Except as otherwise contemplated
herein, from and after the date of this Agreement and until the Closing, Seller
shall:
(a) continue to conduct its business in the usual and ordinary
manner in which it has been conducted in the past;
(b) maintain the Acquired Assets in their current state of
repair and operating efficiency, normal wear and tear excepted, and maintain in
effect, to the extent commercially available, insurance against property damage
in an amount equal to the replacement value of the Acquired Assets and provide
written notice to Buyer if such insurance ceases to be commercially available;
(c) comply in all material respects with all applicable legal
requirements and the terms of the Assumed Contracts and all applicable
franchises and licenses;
(d) not modify any franchises or licenses applicable to the
operation of the business of the Seller or the Assigned Contracts other than in
the Ordinary Course of Business or with Buyer's prior written consent;
(e) not dispose of any assets except in the Ordinary Course of
Business; and
(f) collect subscriber accounts only in accordance with past
practices.
4.7 ACCESS. Upon prior request by Buyer to a designated
officer of Seller, Seller will cause Buyer to be afforded reasonable access to
the offices, properties, books, contracts and nonprivileged records, including
Tax Returns, of Seller after the date of this Agreement at all reasonable times
during normal business hours and will furnish Buyer with such additional
financial and operating data and other information as Buyer shall from time to
time reasonably request; provided that all such access and information shall be
supplied in such a way as to minimize disruption of Seller's business. Buyer
shall notify promptly Seller in writing of its determination (whether or not the
result of such investigation) that a breach of a representation or warranty made
by Seller herein or alleged default under any covenant has occurred.
4.8 ANNIVERSARY MRI. In connection with the calculation of
Anniversary MRI in Section 2.6 above, Buyer agrees not to take any actions, such
as raising the price of the Services, that could have an adverse impact on
attrition of Customer Contracts.
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4.9 ACCOUNTS RECEIVABLE. Seller hereby covenants and agrees
that, in the event that it shall receive on or after the Closing payments on any
Accounts Receivable, it shall [weekly] remit such payments to Buyer by check.
4.10 UPDATING OF SCHEDULES. Seller will update and revise, if
necessary, and deliver to Buyer the Schedules attached hereto and such other
schedules as may become necessary at least two business days prior to the
Closing Date in order to maintain, and to enable Buyer to confirm, the continued
material accuracy of the representations and warranties contained herein.
Seller's compliance with Article 3 shall be determined based upon the Schedules
delivered on the date of this Agreement.
4.11 POST-CLOSING ASSISTANCE. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement and to effect, consummate, confirm or evidence the
consummation of the transactions contemplated hereby (including, without
limitation, with respect to obtaining all licenses, permits, authorizations,
accreditations and consents necessary in connection therewith), each of the
Parties will take such further action (including, without limitation, the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Article 9).
4.12 EMPLOYEES. Buyer shall provide offers of employment with
Buyer to Seller's employees (other than Xxx Xxxxxxxx) on terms comparable to the
terms of employment with Seller, provided that Seller's terms of employment are
similar to the terms offered to comparably-situated employees of Buyer.
4.13 SHAREHOLDERS' NO-SHOP COVENANT. From the date hereof
until the Closing Date, the Shareholders agree (a) to vote all shares of Seller
beneficially owned by them against any other transaction relating to the
issuance of equity securities by, the sale of any of the assets of Seller, a
change of control of or any other transactions not in the Ordinary Course Of
Business of, Seller and to grant proxies to Buyer's designees to that effect,
and (b) not to sell or otherwise dispose of any interest in any shares of Seller
beneficially owned by them.
4.14 SELLER'S AND SHAREHOLDERS' NONCOMPETITION AND
NONSOLICITATION COVENANTS.
(a) In consideration of the Purchase Price, Seller and the
Shareholders each agree that during the period beginning on the Closing Date and
ending on the fifth anniversary of the Closing Date (the "NONCOMPETE PERIOD"),
it, he or she, as the case may be, shall not, directly or indirectly, either for
itself, himself or herself, as the case may be, or for any other Person, permit
its, his or her name, as the case may be, to be used by or Participate (as
defined below) in any business or enterprise which provides Services in the
Hillsborough County or Pinellas County, Florida. For purposes of this Agreement,
the term "PARTICIPATE" includes any direct or
27
indirect interest in any enterprise, whether as an officer, director, employee,
partner, sole proprietor, agent, representative, independent contractor,
consultant, franchisor, franchisee, creditor, owner or otherwise; provided that
such term shall not include ownership of less than one percent of the stock of a
publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market.
(b) During the Noncompete Period, neither Seller nor the
Shareholders shall (A) induce or attempt to induce any customer under any
Customer Contract to cease doing business or to decrease its business with
Buyer, (B) induce or attempt to induce any Employee to leave their employ with
Buyer or in any way interfere with the relationship between Buyer or its
affiliates and any of their employees or (C) induce or attempt to induce any
supplier, agent, licensee, licensor, franchisee, or other business relation of
Buyer or its affiliates to cease doing business with them or in any way
interfere with the relationship between Buyer or its affiliates and any customer
or business relation.
(c) The Parties agree that Buyer may suffer irreparable harm
from a breach by Seller or the Shareholders of any of the covenants or
agreements contained in this Section 4.14. In the event of an alleged or
threatened breach by Seller or the Shareholders of any of the provisions of this
Section 4.14, Buyer or its successors or assigns may, in addition to all other
rights and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions hereof (including the
extension of the Noncompete Period by a period equal to the length of the
violation of this Section 4.14). In the event of an alleged breach or violation
by Seller or the Shareholders of any of the provisions of this Section 4.14, the
Noncompete Period shall be tolled until such alleged breach or violation is
resolved. Seller and the Shareholders agree that these restrictions are
reasonable.
(d) If, at the time of enforcement of any of the provisions of
this Section 4.14, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the Parties agree that the
maximum period, scope or geographical area reasonable under such circumstances
shall be substituted for the maximum period of time, scope and geographical area
as to which it may be enforceable.
(e) Seller and the Shareholders agree that the covenants made
in this Section 4.14 shall be construed as an agreement independent of any other
provision of this Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Agreement.
4.15 Seller shall file documents necessary to change its
corporate name from Gator Telecom, Inc. to another name reasonably acceptable to
Buyer no later than five business days after the Closing Date.
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4.16 Buyer shall obtain a surety bond in favor of the City of
Tampa, Florida within 60 days after the Closing to substitute for the surety
bond posted with the City of Tampa, Florida by Seller and on which Xxx Xxxxxxxx
is a guarantor.
4.17 Buyer shall provide Seller access to all books, records,
ledgers, files, documents, correspondence, lists, drawings, specifications,
advertising and promotional materials, studies, reports and other printed or
written information regarding the Alarm Service Assets that were in existence on
or prior to the Closing Date during normal business hours upon reasonable notice
by Seller to Buyer of its desire to review any of the foregoing.
4.18 Seller shall pay for all vacation due its employees up to
and including the Closing Date, and Buyer shall permit all employees to take
vacations scheduled for after the Closing Date that are scheduled with Seller on
or before the Closing Date.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER
Unless waived in writing by both Buyer and Seller, the respective
obligations of each of Buyer and Seller set forth herein shall be subject to the
fulfillment of the following mutual conditions at or prior to the Closing Date:
5.1 NO INJUNCTION, ETC. No preliminary or permanent injunction
or other order issued by any federal or state court of competent jurisdiction in
the United States nor any statute, rule, regulation or executive order
promulgated by any federal or state governmental authority which restrains,
enjoins or otherwise prohibits the transactions contemplated hereby shall be in
effect.
5.2 NO PROCEEDING OR LITIGATION. No suit, action or
governmental proceeding (other than orders, actions, proceedings or
investigations relating to the alarm service industry in general) before any
court or any governmental or regulatory authority shall have been (i) commenced
by a third party and be pending or (ii) "overtly threatened" by a third party
against Buyer, Seller, Shareholders or any of their affiliates, associates,
officers or directors (the "Threatened Party") seeking in either case to
restrain, prevent or change in any material respect the transactions
contemplated hereby or seeking material damages in connection with any of such
transactions. Administrative proceedings before the Federal Trade Commission
("FTC") and actions by the U.S. Department of Justice ("DOJ") where a request
for a temporary restraining order and/or preliminary injunction has been denied,
no appeal is pending and the time for filing an appeal has expired, or such
request or appeal has been withdrawn, are expressly excluded from this Section
5.2. "Overtly threatened" means that a potential claimant has manifested to the
Threatened Party an awareness of, and present intention to, assert a possible
claim or assessment, unless the likelihood of litigation could reasonably be
considered remote or slight.
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5.3 VALUE OF QUALIFIED MRI. The Parties shall have agreed on
the value of the Qualified MRI calculated as of the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller set forth herein shall be subject to the
fulfillment of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on the date hereof and shall also be true and correct in all
material respects on and as of the Closing Date, except for changes contemplated
by this Agreement, with the same force and effect as if made on and as of the
Closing Date.
6.2 PERFORMANCE OF AGREEMENT. Buyer shall have performed, and
complied with, in all material respects, all obligations, agreements and
covenants contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date including, without limitation, the deliveries
listed in Section 2.7(b)(ii).
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Buyer's obligations set forth herein shall be subject to the
fulfillment of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects on the date hereof and shall also be true and correct in
all material respects on and as of the Closing Date, except for changes
contemplated by this Agreement, with the same force and effect as if made on and
as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENT. Seller shall have performed, and
complied with, in all material respects, all obligations, agreements and
covenants contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date including, without limitation, the deliveries
listed in Section 2.7(b)(i).
7.3 CONSENTS. All of the consents and approvals shall have
been obtained.
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ARTICLE 8
SURVIVAL PERIOD
8.1 COVENANTS AND AGREEMENTS. Unless otherwise specifically
limited by this Agreement, all of the covenants and agreements made by the
Parties in this Agreement shall survive the Closing and continue in full force
and effect after the Closing without any time limitation.
8.2 REPRESENTATIONS AND WARRANTIES. Unless incorporated in any
instrument of conveyance delivered at or as of the Closing and expressly limited
therein, all of the representations and warranties provided in this Agreement
shall survive the Closing for two years and be unaffected by any investigations
made by or on behalf of any Party hereto, provided that: (i) those matters
described in Sections 3.1(b) (Authorization), 3.1(g)(i) (Title to Personal
Property Assets), 3.1(v) (Brokers' Fees), 3.2(b) (Authorization), and 3.2(e)
(Brokers' Fees) shall survive indefinitely, and (ii) those matters described in
Section 3.1(w) (Taxes) and claims arising out of product liability, product
warranty, strict liability and product recall claims, shall survive until
expiration of the applicable statute of limitations and other extensions
thereof.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. Seller agrees that,
notwithstanding the Closing and regardless of any investigation made at any time
by or on behalf of Buyer, Seller will indemnify and save and hold each Covered
Person harmless from and against all claims, costs expenses, damages,
liabilities, losses and deficiencies suffered or incurred by each Covered Person
(including, without limitation, reasonable attorneys' fees and other reasonable
costs and expenses incident to any claim, suit, action or proceeding) arising
out of or relating to, and will pay each Covered Person on demand the full
amount of any sum which any such Covered Person may pay or may become obligated
to pay in respect of:
(a) INACCURACY OF REPRESENTATION. Any inaccuracy in any
representation or the breach of any warranty made by Seller or the Shareholders
pursuant to this Agreement.
(b) FAILURE TO PERFORM. Any failure by Seller or Shareholders
to duly perform or observe any term, provision, covenant, agreement or condition
in this Agreement to be performed or observed by it including, without
limitation, all liabilities and obligations with respect to the Excluded
Liabilities.
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9.2 INDEMNIFICATION BY BUYER. Buyer agrees that,
notwithstanding the Closing and regardless of any investigation made at any time
by or on behalf of Seller or Shareholders, Buyer will indemnify and save and
hold Seller and the Shareholders harmless from and against all claims, costs,
expenses, damages, liabilities, losses and deficiencies suffered or incurred by
Seller or Shareholders (including, without limitation, reasonable attorneys'
fees and other reasonable costs and expenses incident to any claim, suit, action
or proceeding) arising out of or resulting from, and will pay Seller and the
Shareholders on demand the full amount of any sum which Seller or Shareholders
may pay or may become obligated to pay in respect of:
(a) INACCURACY OF REPRESENTATION. Any inaccuracy in any
representation or the breach of any warranty made by Buyer pursuant to this
Agreement.
(b) FAILURE TO PERFORM. Any failure by Buyer to duly perform
or observe any term, provision, covenant, agreement or condition in this
Agreement to be performed or observed by it including, without limitation, all
liabilities and obligations with respect to the Assumed Liabilities.
(c) PERSONAL GUARANTIES. Any liability of Xxx Xxxxxxxx or
Xxxxx Xxxxxxxx arising from and after the Closing Date as personal guarantors
with respect to the Assumed Liabilities and any performance, surety and warranty
bonds entered into in Seller's Ordinary Course of Business.
9.3 COOPERATION. A Party (the "INDEMNIFIED PARTY") will give
prompt written notice to the other Party (the "INDEMNIFYING PARTY") of any claim
which the Indemnified Party discovers or of which notice is received after the
Closing and which might give rise to a claim by the Indemnified Party against
the Indemnifying Party under Sections 4.3(a) or 4.3(b) hereof, stating the
nature, basis and amount thereof. In case of any claim by a third party, any
suit, any claim by any governmental body, or any legal, administrative or
arbitration proceeding with respect to which the Indemnifying Party may have
liability under the indemnity agreements contained in Sections 4.3(a) and 4.3(b)
hereof, the Indemnifying Party shall be entitled to participate therein, and to
the extent desired to assume the defense thereof, and after notice to the
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable to the other for any legal or other
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof, other than reasonable costs of investigation, unless the
Indemnifying Party does not actually assume the defense thereof following notice
of such election. The Indemnified Party shall make available to the Indemnifying
Party and its attorneys and accounts, at all reasonable times, all books and
records relating to such suit, claims or proceedings, and the Parties will
render to each other such assistance as may reasonably be required of each other
in order to insure proper and adequate defense of any such suit, claim or
proceeding. No Party will make any settlement of any claim which might give rise
to liability of the other under the indemnity agreements contained in Sections
4.3(a) or 4.3(b) hereof without the consent of the other. If a Party shall
desire and be able to effect a compromise or settlement of any such suit, claim
or proceeding and the other
32
Party shall refuse to consent to such compromise or settlement, then the
liability of the Party desiring to settle or compromise to the Party which
refuses to consent with respect to settlement or compromise of such suit, claim
or proceeding shall be limited to the amount so offered in compromise or
settlement.
9.4 DETERMINATION OF LOSS. With respect to any Loss, the
Indemnifying Party shall indemnify the Indemnified Party against the time value
of money (using the discount rate applicable at the time of the Loss) associated
with such Loss, for the period of time the Loss remained uncompensated. In the
event of any breach or inaccuracy in Sections 3.1 (o) or (p) because the
Qualified MRI or the book value of the Acquired Assets referred to therein is
not at least equal to the amount set forth therein, the Loss arising as a result
thereof shall be deemed to be 39 multiplied by the shortfall in such Qualified
MRI or book value.
9.5 RISK ALLOCATION. The representations, warranties,
covenants and agreements made herein are intended among other things to allocate
the risks inherent in the transaction contemplated hereby between the Parties,
and accordingly, a Party shall be entitled to the remedies prescribed by this
Agreement by reason of breach of any such representation, warranty, covenant or
agreement by another Party notwithstanding whether any employee, representative
or agent of the Party seeking to enforce a remedy knew or had reason to know of
such breach.
9.6 SPECIAL RULE FOR FRAUD. Notwithstanding anything in
Section 4.2(b) to the contrary, in the event of any breach of a representation
or warranty by a Party that is intentional or constitutes fraud, the
representation or warranty shall survive consummation of the transactions
contemplated in this Agreement and continue in full force and effect forever
thereafter.
9.7 GUARANTY AGREEMENT. Each Shareholder shall execute and
deliver at the Closing a Guaranty Agreement pursuant to which the Shareholders
will agree to guarantee the payment to the Buyer pursuant to any indemnification
claims made under this Agreement.
ARTICLE 10
INTENTIONALLY OMITTED.
ARTICLE 11
MISCELLANEOUS
11.1 PRESS RELEASE; DISCLOSURE. Simultaneous with the
execution of the Agreement, Buyer may, at its discretion, issue a press release
with respect to the execution of this Agreement in a form mutually acceptable to
Buyer and Seller. Except with respect to such press release and the information
contained therein, neither Party shall disclose to any Person, other
33
than its financial and legal advisors and primary lenders and to the extent
disclosure is otherwise required by law, the terms and provisions contained in
this Agreement without the prior written consent of the other Party.
Notwithstanding the above, a Party required by law to disclose the existence of
the terms and provisions of this Agreement shall use its best efforts to provide
prior notice to the other Party giving the other Party an opportunity to comment
on the content of such disclosure.
11.2 NO THIRD PARTY BENEFICIARIES. This Agreement (other than
Section 4.3 to the extent it purports to confer rights upon the Covered Persons)
shall not confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
11.3 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior or contemporaneous understandings, agreements, or
representations by or between the Parties, written or oral, that may have
related in any way to the subject matter hereof excluding the Confidentiality
Agreement.
11.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Parties hereto; provided, that prior to
Closing, Buyer may, without the consent of, but with notice to, Seller, assign
this Agreement and the right to acquire the Acquired Assets to one of its
subsidiaries or affiliates.
11.5 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6 HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.7 NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) when
delivered, if personally delivered, (ii) when receipt is electronically
confirmed, if faxed (with hard copy to follow via first class mail, postage
prepaid) or (iii) one day after deposit with a reputable overnight courier, in
each case addressed to the intended recipient as set forth below:
34
IF TO THE SELLER OR THE SHAREHOLDERS:
Xxx Xxxxxxxx
Xxxxx Xxxxxxxx
Gator Telecom, Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Xxxxx Xxxxx, Esq.
Kass Xxxxxx, P.A.
Centre Square
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO BUYER:
Guardian International, Inc.
0000 X. 00xx Xxxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, President and Chief Executive Officer
Telephone: (000) 000-0000, Ext. 203
Facsimile: (000) 000-0000
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Xxxxxx Xxxxxxx, Esq.
Steel Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
11.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida. No
Party, solely by virtue of executing this Agreement shall be deemed to have
submitted to the
35
personal jurisdiction of any forum or waived any objection such Party may have
as to proper venue of any forum.
11.9 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
each Party. No waiver by any Party of any default misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
11.10 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term of provision, to delete specific words
or Phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
11.11 EXPENSES. Except as otherwise provided in Sections 4.3,
4.6 or 4.7(c), each Party will bear its own costs and expenses (including legal
and broker fees and expenses) incurred in connection with, or arising out of,
this Agreement or the transactions contemplated hereby.
11.12 TRANSFER TAXES. All documentary, sales, use,
registration and other transfer taxes (including, but not limited to, all
applicable real estate transfer or stock transfer Taxes) and fees incurred in
connection with the sale of the Acquired Assets and the other transactions
contemplated hereby shall be paid by Buyer.
11.13 CONSTRUCTION. The Parties have jointly participated in
the negotiation and drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumptions or burdens of proof
shall arise favoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Nothing in the disclosure schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the disclosure
schedules identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a
36
representation or warranty made herein (unless the representation or warranty
relates solely to the existence of the document or other items itself). The
Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance. If any Party has breached any
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
11.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
11.15 NUMBER AND GENDER. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used herein has a comparable meaning whether used in a
masculine, feminine or gender-neutral form.
11.16 REMEDIES. In the absence of fraud or an intentional
breach of any provision hereof, no Party shall be liable or responsible in any
manner whatsoever to any other Party, whether for indemnification or otherwise,
with respect to any matter arising out of the representations, warranties or
covenants of this Agreement or any Schedule hereto or any opinion or certificate
delivered in connection herewith, except for (i) equitable relief as described
below, (ii) indemnity as provided in Article 9, or (iii) pursuant to other
remedies expressly provided for in this Agreement all of which provide the
exclusive remedies of the parties. Each of the Parties acknowledges and agrees
that each other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
each other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity. Each Party shall have the right to set off
against any obligation of such Party (or such Party's affiliates) to make
payment to any other Party (under this Agreement or otherwise), any amount owed
to the first Party by such other Party (or such Party's affiliates) (under this
Agreement or otherwise). In no event shall any Party's liability to another for
any claim arising under this Agreement or arising out of this transaction exceed
the Purchase Price.
11.17 DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by any person or entity, or which such
person or entity is prohibited from taking, such provision shall be applicable
whether the action in question is taken directly or indirectly by such person or
entity.
37
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
GUARDIAN INTERNATIONAL, INC.
By: /s/ XXXXXXX XXXXXXXX
----------------------------------
Xxxxxxx Xxxxxxxx, President and
Chief Executive Officer
GATOR TELECOM, INC.
By: /s/ XXX XXXXXXXX
----------------------------------
Xxx Xxxxxxxx, President
Shareholders:
/s/ XXX XXXXXXXX
-------------------------------------
Xxx Xxxxxxxx
/s/ XXXXX XXXXXXXX
-------------------------------------
Xxxxx Xxxxxxxx
38
